“Semi-stability” characterizes Moroccan household borrowing rates in the face of high “faltering performance”

In parallel with the volume of “cash” (cash transactions) in circulation in Morocco exceeding 430 billion (about 30 percent of the country’s GDP, making it one of the highest rates in the world), according to what the Governor of Bank Al-Maghrib announced in his quarterly conference on Tuesday, “the banks’ need for liquidity” has recorded a significant increase that may increase the complexity and entanglement of “monetary conditions” in the Kingdom in the coming months, especially in light of the summer season, which witnesses the peak of “household consumption” and “the return of Moroccans abroad.”

According to the detailed data reviewed by Hespress newspaper in the Central Bank of Morocco’s report on “monetary policy,” issued following the second quarterly meeting of its Board of Directors for the year 2024, it appears that “banks’ need for liquidity continued to rise to reach 111.6 billion dirhams on a weekly basis in the first quarter, before declining slightly to 110.2 billion on average during the past two months of April and May.”

The report stated that under these circumstances, “the Central Bank’s intervention increased the amounts it pumped to revive the Moroccan money market to 123.9 billion dirhams, then to 124.1 billion dirhams, respectively.”

The analysis of “monetary conditions” also did not lack in the first quarter of the current fiscal year a distinctive mark, which is “a 0.54 percent decline in the real effective exchange rate, and a quasi-quarterly stability in lending rates at 5.40 percent,” concluding in one of its prominent conclusions that they “have maintained their rise since the beginning of the monetary tightening cycle in September 2022 to 116 basis points.”

“Household borrowing slows”

“Bank lending to the non-financial sector” in Morocco also followed a “slowdown” trend, recording a rate of 2.6 percent after 2.8 percent in the previous quarter, “in line with the slowdown in the growth rate of loans to public institutions and enterprises, as well as to the benefit of Moroccan families.”

According to the aforementioned economic data source, the latest available data for April 2024 indicates “the credit rate is almost stable at 2.7 percent.”

In particular, Bank Al-Maghrib reported that “the growth rate of credit to the non-financial sector slowed from 2.8% to 2.6%, as a result of the slowdown in the growth of loans to public institutions from 31.1% to 22.7% and loans to households from 1.9% to 1.2%”, against “an increase in loans to private companies by 0.4% after a decline of 0.3% in the previous quarter”.

By extrapolating the official data, it becomes clear from the distribution of loans provided to families that those directed to individual business owners “decreased” by 5.6% after an “increase” of 2.1% on a quarterly basis.

While the increase in loans to individuals remained “stable” at 1.9 percent, with a slowdown of 1.5 percent, and from 1.9 to 1.5 percent for the “housing loans” category, and “semi-stability or stagnation” of 0.5 percent in the increase in “consumption loans.”

“Rise in non-performing loans”

As for non-performing loans, they increased by 5.4 percent and remained unchanged as a percentage of total “all outstanding bank loans”, at 8.7 percent from one quarter to another.

In detail, the monetary data of the Bank of Morocco revealed an “increase in outstanding debts” by 5.3 percent for “private non-financial companies,” and by 5.4 percent for “households,” by 12.9 percent and 10.1 percent, respectively, for total loans. The receivable is in default.

It is noteworthy that the latest available official data dates back to April 2024 and showed “annual credit growth of 6 percent in the banking sector, reflecting an increase of 2.7 percent in credit to the non-financial sector and 28.1 percent for “other financial companies.”